Financial Planning: A Definitive Guide

You deserve a secure future.

You can’t just hope that things will work out.

Financial planning is important if you want to be prepared for the future.

Having financial goals and a plan to achieve them helps.

That’s why we’re here, so let us help you get started on your journey today!

Let’s dive in!

Financial Planning


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Chapter 1.

Why Financial Planning

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Chapter 2.

Financial Planning Process

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Chapter 3.

Set Your Goals To Get Started

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Chapter 4.

A Budget In Hand Goes A Long Way

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Chapter 5.

Think About Tax Planning

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Chapter 6.

Do It The Insurance Way

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Chapter 7.

Investment Planning

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Chapter 8.

Investing & Reviewing Your Plans

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Take the next steps!


Financial Planning

Are you anxious about your finances? Does making plans for your little goals seems surreal to you? Thinking about your money-saving skills giving you chills? If yes, you have come to the right place.

“Financial illiteracy is becoming a major hindrance for people who want to make sound financial decisions for their life.” – Forbes

Today, in this guide, I am going to share some valuable insights regarding financial planning to meet your every day and even long-term financial goals.

What I am going to cover in this guide:

  • Why is financial planning necessary for you?
  • What are the different variables of financial planning?
  • A step-by-step guide to making a good financial plan?
  • Different mechanisms you can use to get results

Are you working hard all day and still need to hustle to meet the ends every month? If yes, then you are certainly not taking your finances seriously.

Making efficient financial plans is the need of the hour. If you have decided to take control of your finances, this guide has everything you need.

Without further ado, let’s get started with the planning.


Why Financial Planning?

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It is a question you might have in your mind when I emphasized the need for financial planning. So, I will be kickstarting this guide with the importance of having financial planning, which will lay the groundwork.

In this chapter, I’ll cover the prominence of financial planning in life and why you need to start it right away.

will highlight the definition, objectives, and some significant reasons you need stable financial planning to meet your goals.

So, What Is Financial Planning After All?

There’s no rocket science involved in understanding financial planning.

It is simply a process of framing your monetary policies regarding your investment, procurement, and distribution of funds. Financial planning gives you a clear idea regarding your capital requirement for a particular or group of goals.

Let’s take an example: You are planning a holiday trip with your family to Bali. It is impossible to make your trip successful without efficient financial planning.

It would be best if you started preparing finances right from the moment you make up your mind. It would be best to create mini-budget goals for every other step in your journey, including tickets, accommodation, travel, food, etc.

Now you need to arrange finances in order to meet those goals. 

What Are The Objectives of Financial Planning?

The best plan you can create for a secured life is certainly a financial plan. Here are a few objectives that you need to look forward to:

  • Determine Capital Requirements: There is no better mechanism than a financial plan to determine your capital requirements. Factors like the cost of fixed assets, expenses, long term investment, etc., frame the decision.
  • Distinguish Need And Desire: What these two terms mean to you? Need is associated with necessity, and desire is related to yearning. Financial planning will help you in differentiating your needs from desire and vice versa.
  • Improve Annual Saving: The most crucial objective of financial planning is to improve your saving capacity. It is quite natural; once you develop an organized way of handling your finances, you will enhance savings.

What Are The Top Benefits Of Sound Financial Planning?

There’s no doubt in asserting that creating plans for completing any task makes it seamless and easily achievable. The same goes for financial planning.

When it comes to financial planning, you can’t live with the attitude of crossing the bridge when you come to it.

It would be best if you prepare yourself for every uncertainty that comes your way, and only a good plan in hand can make it possible.

Take a look at a few reasons that will compel you to start your financial planning today-:

  • Better Standard Of Living: Everyone wants to live a life that allows them to enjoy every moment of it without any stress. You might have to sacrifice your living standard if you do not have plans to meet your needs. From monthly bills to EMI payments, a strong financial plan will help you meet all your objectives, thereby increasing your standard of living.
  • Prepare You For Emergencies: Human lives are uncertain; you cannot predict what might happen the very next second. However, having a financial plan will prep you up for the uncertainties. It is like a contingency plan that will support you in the time of need. Whether it is a medical crisis or a job loss, if you have your funds sorted, you will never have to stress about anything.
  • Peace of Mind: Would you like fretting about your finances and worrying about their allocation every day? Probably not. That’s why planning everything beforehand will offer you the required peace of mind. It helps in managing your money in the right way and lead your life harmoniously.

In A Nutshell: If you have set your goals, financial planning can take you closer to them!


Financial Planning Process

Financial Planning

It’s time that I address the elephant in the room and get right to the main topic. i.e., the guide to financial planning.

There’s nothing you need to stress about when it comes to financial planning. You don’t need to visit a professional financial planner. All you need is to take some baby steps that will take you closer to your goals.

In this particular chapter, I’m going to highlight the steps involved in active planning.

Get your notepad and pencils to jot down these important points.

You Are Just A Few Steps Away From An Efficient Financial Planning

Indeed, you are so close to creating a successful financial plan. Keep scrolling and discover some easy-peasy steps to meet your financial goals.

Step 1: Goal Setting

Everything starts with setting your goals that further encourages you to create plans. Without efficient planning, you can never frame your funds in the right way.

So, your first step should be to set your goals. You can also divide your goals into small achievable targets making it easier for you to plan.

Before starting anything, create goals in your life that you need to meet with efficient financial planning.

Step 2: Budget Creation

Once you have set your goals and divided them into different categories, you need to create a budget. You can take this as your monthly or annual savings-cum-cash flow-cum-investment plan.

Take time and decide where you have to allocate how much money. Use budgeting tools to streamline the entire process. Trust me, you are going to love this process once you get the hang of it.

Step 3: Tax Planning

Experts always associate finances with taxes. If you are not ready to pay your taxes on time, you cannot expect to create successful financial plans.

It is essential to understand that your tax planning can pave the way for more money via deductibles. Such money will be a blessing in disguise for you.

So, never hesitate to plan your taxes.

Step 5: Thinking Insurance

There’s nothing more potent and fulfilling than an insurance plan when it comes to thinking about investment methods.

These are the best mechanisms for long-term saving and help you cover your financial needs whenever you need them. You can think about life insurance, term insurance, medical insurance, etc.

Step 6: Investment Planning

It is the turning point in your financial planning. Now is the time when you allocate your funds in the right way. You need to invest your money where you are most likely to get returns.

There are plenty of ways to invest your money and bring financial stability, like mutual funds, SIPs, stocks, etc. Think about the most suitable option for yourself.

Step 7: Investing in Specific Goals

Remember step 1? Well, step 6 is all about making it come true. You need to start investing in your specific goals and allocate your finances wisely.

Distinguish your goals into short, medium- and long-term goals, and then distribute funds using different investment vehicles.

For instance: If you want to save for your child’s higher education, you need to make long-term investments and think about equity funds. 

Step 8: Reviewing Plan

Last but definitely not least is reviewing your plans. Financial goals are indeed dynamic; they keep changing according to your requirements.

So, it would be best if you fine-tuned your plans every now and then. It is also essential to monitor your existing plan and ensure everything is in the right place.

What’s Next?: Don’t stop right here. I don’t intend to leave you in the middle. In the coming chapters, I will explain each step mentioned above to give you a better understanding of the process. 

Keep Scrolling!


Set Your Goals To Get Started

Financial Planning

Writing down everything you need in the next five years or even tomorrow is the best way to achieve it. It brings the organization into your life.

When it comes to financial planning, you need to set goals to meet them efficiently.

In this chapter, I will discuss why setting goals is a crucial step, and how you can make the process seem like a cakewalk.

It’s time to learn something new and meaningful, gear up, and read on.

Why Are Setting Goals Necessary?

Can you aim your dart without a target? Of course not. Similarly, living a life without plans is throwing your darts aimlessly, bringing you no results whatsoever.

Whether it is your personal or professional life, you will not get a pathway without targets without goals.

The first step to efficient financial planning is to create goals that further sets the groundwork for plans.

Here’s why you need to think about it:

  • Makes the process of financial planning streamlined for you.
  • Improves your saving tendency and promote your planning skills.
  • Help you adapt to changes that happen in your life, affecting your financial requirements. It will help you make adjustments along the way.
  • Allows you to strategize in a better way and get hold of your finances.
  • Gives you clarity in life and lets you achieve your financial requirements.
  • Enables you to choose the better from the rest.
  • Prepares you for the future and provides you with an aim in your life that will lay your planning foundation.

Penny For Your Thoughts: No matter how much I highlight the importance of goal setting, you need to start with it to realize its benefits. Read on to learn how to go about it. 

How To Set Your Goals?

If you are new to the world of managing finance or do not have any good experience with it, maybe you need a little thrust to make things successful.

Here’s how you can start setting a meaningful goal and further make plans for the same.

  1. Add What Matters To You: First, you need to figure out what’s important to you and what’s not. You need to set priorities for your needs. Seeing everything through the filter of practicality and significance is necessary to weigh your goals and choose the most important.
  2. Distribute Your Goals: Once you have created a rough outline of your goals, your next step should be to segregate your goals into different categories. It would be best to distribute them into short, medium, and long-term goals.

How so?: Short term goals are for things you need to achieve in the nearest future, paying monthly bills – for instance. Long term goals are for things you need not achieve early. Setting aside money for your retirement. 

  1. SMART Strategy: To make your goal-setting process more comfortable for you, apply the SMART strategy. Being Specific, Measurable, Achievable, Relevant, and Timely is a strategy that you can develop over time. Be specific to your goals and measure them to make relevant and achievable tasks promptly.
  2. Leave Scope For Changes: Whenever you are setting goals, either long term or short, you need to make room for the sudden changes. So, always try to make your goals flexible and easy to change at any point in time.

That’s how easy goal setting can be for you. So, stop procrastinating and start setting goals for your financial requirements.


Budget In Hand Goes A Long Way

Financial Planning

Once you have set your goals and segregated them into the right category, the next crucial step is creating a budget for them.

If setting goals is the first step to making potent financial plans, a personal budget is a stepping stone to achieving those goals.

In this chapter, I will be enumerating the benefits and process of creating a budget for your goals and a few tools that can help you make things easier.

Remain patient as things you are going to achieve through this guidebook is certainly priceless. Let’s get started with budget creation.

Why Having a Budget Will Always Help You?

Believe it or not, budgeting helps in keeping your finances in order. It gives you an organized way to follow your goals and achieve them without any hassle.

Here’s why everyone must focus on creating a personal budget to meet individual goals:

  • Planning your expenses is the key to efficient money management. If you want to achieve your goals, you must not lose track of your expenses. Good budgeting keeps track of your income and regulates your expenses.
  • When you have a potent budget in your hand, you can improve your savings and keep control of overspending. If you have been overspending your money for a while, you must practice budget-making.
  • Budgeting means planning ahead. It helps in meeting your goals without disturbing your everyday lives and expenses. It simply ensures that you have money for everything.
  • It helps in creating a contingency plan for emergency situations. Hence, it would help if you always prioritized the need for a personal budget.

Steps To Create A Result-Oriented Budget

If you are worried your finances are all over the place, it’s time to start planning ahead and create a personal budget.

I have developed a step-by-step approach to ease your hassle of creating a budget.

  1. Find Your Objective: Before thinking how to plan a budget, you need to clear the clutter and set your objectives straight. Your budget must be responsive to your goals. You need to find the objectives behind the creation of a budget.

Let’s take an example: List all your goals, like buying a house, retirement plans, child’s higher education, etc. Now prioritize them accordingly and set aside different budgets for each.

  1. Track Your Expenses: When you are planning to achieve your goals, you cannot just focus on them. It would help if you looked out for your everyday expenses. So, when you are creating a budget, make sure to identify and track your expenses. Allocate small funds for each expense and try not to go overboard. 
  1. Separate Needs From Wants: I cannot emphasize more on the importance of distinguishing needs from wants. It is a crucial point in financial planning that starts from the budgeting phase. When you create your personal budget, try to filter out the needs from wants. 
  1. Emergency Corpus: You need to prepare for the uncertainties, and so does your budget. It is basically the fund you set aside for emergencies, like medical emergency, relief during job loss, meeting an urgent requirement, etc.  
  1. Always SAVE: When you think about tracking your expenses and setting aside funds for your goals, you must not compromise on the saving. It should continue simultaneously without disturbing your budget making. 

Top 5 Tools For Creating a Personal Budget

#1 YNAB (You Need A Budget)

Isn’t the name of this app catchy enough to get started with budgeting? YNAB is my favorite personal budgeting tool that you can use for multiple purposes. It helps you create an efficient budget by giving a few variables. YNAB can help you review your expense report and plan your next month’s budget.

#2 Quicken

Manage your money on the go with this incredible budgeting tool. It handles budgeting, bill payments, investment, and reporting in one application. Quicken is the quickest way allocate your funds and create budget for your different needs.

#3 Monefy

It is financial organizing and tracking app in India that helps you keep track of your funds. Monefy also helps you track daily purchases and bills for quick tracking. A majority of Indian household have already favored Monefy for its efficiency.

#4 Spreadsheet

Nothing can come closer to the efficiency delivered by Google Sheets or Spreadsheets. It is the ultimate tool to track your expenses, create a budget, and do every essential step for your finances. You just need to download the Google Sheets app on your phone or use your laptop to make quick budgets.

#5 Good Budget

It is a dedicated budgeting app that is best for Indian home budget planning. Reasonable Budget does the real-time tracking of your expenses and give you monthly reports. The app has good a great reputation even among financial experts.

Make Sure: To always choose the tools and resources to create a staunch financial budget. 


Think About Tax Planning

Financial Planning

Taxes are nothing you need to be scared of. Instead of viewing them as your duty towards the nation’s economy, you can consider them as a way of saving some bucks.

Taxes planning is not about giving away your hard-earned money in taxes; instead, it is the way of saving money in your bank account.

Read this chapter to know more about tax planning and how you can make it profitable for yourself.

What is Tax Planning?

The process of tax planning is about increasing tax efficiency. It is the most crucial element of financial planning that can make things smoother for you.

Reducing tax liability and maximizing your financial planning abilities are the main objectives of healthy tax planning. It helps in analyzing your finances and improve your saving.

How To Go About Tax Planning?

You certainly cannot avoid the step of tax planning if you want to manage your finances. So, it is better to get on with it as early as possible.

You can make an efficient tax plan by following these steps:

  • The starting point for tax planning is taking your entire income into account. If you want to plan your taxes accurately, you need to assess your monthly and annual income.
  • It goes without saying that you need to evaluate your income from the tax perspective and ensure all the taxable components.

For Instance: Housing and rent allowances added to the salary and base pay are not taxable income. However, your income from investments comes under taxable income. 

  • Always try to use as many deductibles as possible. When you use deductibles, you can reduce your total taxable income. Check all the tax brackets and check how you can get tax relief and adjust your income in that bracket.

Best Examples: Equity Linked Saving Schemes (ELSS), Mutual Funds, Insurance Premiums, Provident Public Fund (PPF), National Saving Certificates (NSC), and long-term bank deposits are some of the best tax-saving instruments. 


Do It The Insurance Way

Financial Planning

Whether for financial planning or not, taking insurance policies is beneficial in all cases. 

It is the best tax saving and investment instrument that comes at a pocket-friendly price.  

Be it life insurance or health insurance, taking these policies can significantly help in your financial planning. Wondering how?  

This chapter is all about exploring the role of insurance in financial planning and what are some of the best policies you can invest in. 

Let’s see what you can learn here.  

What is An Insurance plan?

It is a crucial financial instrument that can protect you and your loved ones financially during the time of need. There are different types of insurance plans available according to your needs.

An insurance plan is a great way to start saving and investing your money in the right place. There’s no doubt in asserting that insurance is among the crucial components for efficient financial planning.  

Why Are Insurance Plans Good For Financial Planning?

Life is all about uncertainties; if you don’t prepare for that unforeseeable future, then you might end up in trouble.  

Let’s take an example: The COVID-19 situation has changed our perspective towards finances altogether. People are more concerned about managing their money, so they prepare for such unpredictable events that have shaken the economy.  

Take a look at some of the best reasons why insurances are beneficial from the perspective of financial planning: 

  • Prepare You Financially: Taking up an insurance plan is a lucrative way to prepare yourself financially. If you take health insurance, you can cover all your medical expenses when in need. This way, you are creating a well-built budget for your specific goals. 
  • Saving Mechanism: If you find it hard to save your money, you must invest in insurance plans like life insurance or term insurance. It creates a disciplined saving ritual for you without disrupting your cash flow.  
  • Addresses Your Multiple Needs: Insurance plans are capable of addressing your multiple needs without even making any extra effort.  

For Instance: If you are thinking about your child’s higher education, you can think of taking term insurance for a fixed period. Later, you can meet that requirement at the maturity of the plan.  

7 Types of Insurance Plans You Need To Know About

Knowing and learning about different insurance plans can do half of the work. Once you know all the insurance types, you can put them into use.  

#1 Term Insurance: It is the most affordable insurance that you can buy to meet your specific goal. As the name implies, this policy is for a particular term. Offering maximum coverage at a minimum premium is the major takeaway of this plan.  

#2 Unit Linked Insurance Plans (ULIPs): Over the years, ULIPs have emerged as a critical tax-saving instrument. The premiums you pay are invested half on your funds and another half on risk coverage.  

#3 Endowment Plans: It is a mix of life insurance and ULIP. The sum assured in the endowment plan is given to the nominee along with the bonus.  

#4 Health Insurance: It is probably the fundamental insurance plan that everyone must own. Health plans are for meeting your medical expenses.  

#5 Child Plan: As the name suggests, it is a plan parents take for their child. It covers higher education, overseas education, marriages, etc.  

#6 Retirement Plan: You need to start thinking about taking this policy from your professional life’s initial days. It will help you generate a considerable amount for your retirement life.  

#7 Money Back Policy: As the name suggests, you will get a fixed sum at regular intervals during your policy term. If the insured dies before maturity, nominees will get the sum assured.  

Don’t Forget: Take up any of the insurance policies and safeguard your life. 


Investment Planning

Financial Planning

Investment planning is an imperative term when it comes to managing your finances. Yes, investing your hard-earned money is the right way to start money management.  

In this chapter, you will learn more about investment planning and the best way to do that. 

The right investment can change your life and bring you more opportunities to increase your bank balance.  

Let’s learn how investment can pave the way for successful financial planning. 

What is Investment?

Investment has a different meaning for different individuals. For some, investing means putting time and effort to earn something valuable, while for others, it is a means of gaining profit by putting money. We need to concentrate on the latter part. Investing means putting your money in the right place and earn profits.  

Just Think: If you take out a part of your income and invest in investment vehicles like mutual funds or stock, you can gain profits within a fixed period of time.  

Why Do You Need To Think About Investing In The Right Way? 

  1. Higher Investment Returns: Investing funds in stocks, bonds, and even insurance plans can provide you with higher returns. Real estate is also a great way to get high returns. 
  1. Tax Savings: Investing in different investment vehicles can get you tax deductions and reduce your tax burdens. 
  1. Beat Inflation: Inflation can be a severe threat to your finances. If you invest your money in the right place, you can beat inflation. 
  1. Reach Your Goals: In the end, investment is a sure shirt way to achieve your goals. You don’t have to suffer and look for other means to meet your requirements.  

Best Investment Vehicles That You Can Consider

I have prepared a list of investment options that you can exercise in the country and expect maximum gains.  

#1 Equity: Due to its volatility, investing in stocks is not always everyone’s cup of yet. However, it remains the top investment option for many.  

#2 Mutual Funds: Mutual fund schemes are an investment in equity stocks. The returns in mutual funds depend on your ability to earn greater returns. You need to understand the market and invest wisely.  

#3 National Pension System (NPS): It is a long term retirement plan regulated by Pension Fund Regulatory and Development Authority (PFRDA). It is an investment option you must start thinking about in the early years of your career.  

#4 Public Provident Fund (PPF): You must be well acquainted with this term as a majority of people turn to this investment option. It is also a long-term investment plan that can guarantee you hefty gains.  

#5 Bank Fixed Deposit: For decades, fixed deposits are considered the best investment plan for families. You need to put a lump sum amount in your account for a specified period of time and earn interest at the time of maturity.  

#6 Real Estate: Even if you are not familiar with selling and buying properties, real estate can become a profitable investment vehicle for you. Properties are asset classes that remain dynamic in the economy, thereby increasing your chances of gaining more returns.  

#7 Gold: With gold prices skyrocketing every hour these days, the prominence of this investment option is quite evident. Buying gold jewelry is a potent investment plan that will come in handy at a time of crisis.  

#8 Senior Citizens’ Saving Scheme: It is an ideal investment plan for people above 60. It is a five-year term plan with a maximum investment limit of ₹15,00,000.  

#9 Systematic Investment Plan: It is the best investment mechanism to meet your financial goals within a period of time. You can set your sum assured and fill up the SIP form. With monthly instalments, you can keep investing in SIP.


Investing And Reviewing Your Plans

Financial Planning

At this point, you need to take a look back at step 1 of financial planning, i.e., setting goals. Now is the time to meet those goals by investing in each.  

Simply investing is not enough; you need to review your plan at regular intervals.  

In this chapter, I am covering the final step of financial planning.  

Hang in there, there’s still a lot you need to explore.  

How To Invest In Your Goal Separately?

Now that you know the importance of investment, you will probably know how to invest in your specific goals. Here are a few steps that will help you in investing in your goals and achieve them.  

  1. Determine The Nature of Goal: Remember that I told you to segregate your goals into short, medium, and long term? Here it will come in handy. When you know the nature of your goal, you can make the best decision to meet it.  
  1. Use The Right Investment Vehicles: Take a look at the above investment option and ascertain which one will be the right fit for your different goals.  

For instance: Nation Pension System is best to prepare yourself for a stress-free post-retirement life.  

Why Reviewing Your Plan Regularly Is Important?

Financial goals are dynamic, and your plan should be the same. That’s why you need to review plans at regular intervals and ensure that they are meeting your requirement in the best way possible.  

Select a time period within which you must tweak your financial plan that abides by your current goals. You need to make regular changes to your plan and keep its significance intact. 

You can also use financial planning software to make your reviewing process much more manageable. 


It was a long ride learning the nitty-gritty of financial planning, wasn’t it? I hope it was totally worth it.  

Setting your financial goals and achieving them without any hassle is the main objective of financial planning.

A sound plan in place helps you and your family to steer clear through the challenges. 

Let me know your thoughts on the comments section below. I would love to interact with you. 

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